Tax Cuts Update
Democrat Chris Van Hollen said the House Democratic caucus will not support the estate tax. House Democrats intend to pass a different tax bill than the Senate. Van Hollen said the bill will go to the floor for a vote in the lame duck session.
Paul Krugman said he can not support the Obama-McConnell tax cut compromise.
The actual stimulus in the plan comes from the other measures, mainly unemployment benefits and the payroll tax break. And these measures (a) won’t make more than a modest dent in unemployment and (b) will fade out quickly, with the good stuff going away at the end of 2011.
The question, then, is whether a year of modestly better performance is worth $850 billion in additional debt, plus a significantly raised probability that those tax cuts for the rich will become permanent. And I say no.
Krugman correctly believe the stimulus doesn't have enough for the $850 billion price tag. The one year extension of unemployment benefits and Social Security payroll tax cut only keeps things from getting worse. What is needed is a national jobs program. The best stimulus is giving people gainful employment. The Obama economic team though throwing stimulus dollars at the private sector would suddenly increase jobs. Lawrence Summers predicted the stimulus would drastically reduce unemployment. The White House now hopes to get unemployment down to 8.5 nationally before the 2012 election. The reason why Obama's original stimulus failed because there wasn't enough funded for job creation. Another factor is Obama and Summers compromised with Mitch McConnell on tax cuts that failed to justify their cost.
Senate Republicans seek to slash income and corporate tax rates as well as the overall level of spending in the bill. "We need to sober up here and take a look at what we're doing," said Senate GOP leader Mitch McConnell, R-Ky.
Summers said Obama wants to keep his tax cuts but will consider other changes. He said "Buy American" provisions for U.S. manufacturers could "send a protectionist signal."
The president "has been prepared to walk a long mile for bipartisan support," Summers said. In the end, he said, Obama wants the best possible package delivered to his desk by Feb. 16.
Obama and Summers caved. The stimulus had $237 billion in tax cuts. Republicans didn't vote for the stimulus bill and the economy still sucks. Obama and Summers are essentially using the same failed policy.